At UK£10.65, Is It Time To Put Focusrite plc (LON:TUNE) On Your Watch List?

Focusrite plc (LON:TUNE), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the AIM over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Focusrite’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Focusrite

What's The Opportunity In Focusrite?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.9% below my intrinsic value, which means if you buy Focusrite today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth £11.69, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Focusrite’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Focusrite generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 12% over the next couple of years, the outlook is positive for Focusrite. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in TUNE’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on TUNE, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Focusrite from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Focusrite, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.